The Hindu Business Line : No more reckless spending, Mallya assures McDowell shareholders

THE Chairman of McDowell & Co, Mr Vijay Mallya, has assured shareholders at the sixth annual general meeting that there would be `no more mindless and reckless spending'.

Mr Mallya was referring to the increased advertising and promotion expenses when the company was fighting for market share with rival Shaw Wallace & Co, before acquiring it. There was also an increased expenditure on long-drawn out legal processes, he said.

The acquisition of SWC would mean `reduced promotion spends and improved market realisations for the company,' and this would mean `better operating profits for the company,' he told shareholders.

According to the company's annual accounts available to shareholders, the company has reduced its spend on advertising and sales promotion activities, and legal and professional services, during the year ended March '05. McDowell has spent Rs 6.95 crore on legal and professional services in the year ended March '05 (against Rs 9.2 crore in the year ended March '04), and Rs 85.9 crore on advertisement and sales promotion for the year ended March '05 (against Rs 107.4 crore for the year ended '04).

In his address to the shareholders, Mr Mallya also reiterated that the liabilities of SWC would not impact the profitability of McDowell & Co.

The company's board on Friday got an approval from shareholders to borrow Rs 5,000 crore, which may be required for company activities and other general purposes such as capital expenditure, working capital requirements, strategic investment, mergers, acquisitions, and so on.

The shareholders also approved a resolution allowing FIIs to invest up to 49 per cent in the equity share capital of the company. The amalgamation of eight companies into McDowell (announced on Thursday) is expected to yield sales of over Rs 3,000 crore in '06 compared to Rs 1,720 crore in '05, Mr Mallya said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page